Halton and 64 people she allegedly recruited to take out loans or grants have been charged, according to indictments unsealed on Wednesday. The alleged fake students were issued arrest warrants or summons to appear in court, prosecutors said.

Halton is accused of creating fake documents and helping people enroll in online classes at Rio Salado Community College in Tempe over a 15 month period beginning in July 2006. It is unclear if she has an attorney.

The alleged ruse was initially discovered by an alert financial aid officer at Rio Salado, Humetewa said at a news conference.

The indictment alleges that Halton charged the fake students between $500 and $1,500 each in exchange for her help applying for Pell Grants and Stafford Loans. The students then kept most of the money that came in but never attended class.

In some cases, Halton is accused of creating fake documents, including high school diplomas and tax forms. Authorities say she maintained extensive records with personal information and documents both real and fake for 136 potential fake students, but the information was only sufficient to charge 64 of them.

Four of those charged are also accused of helping recruit fake students.

Natalie Forbort, special agent in charge at the U.S. Department of Education, said after a news conference Wednesday that federal aid dollars are limited, so financial aid for fake students limits the money available to real ones.

The Department of Education trains college financial aid workers how to spot fraud schemes, but people are always looking for loopholes in the system, Forbort said.

"Even if there's strong internal controls put in place, people will still use their intellect to defraud the programs," she said. "We want to make sure the money is available to the students who actually deserve it."

Prosecutors say Halton logged in to online classes using the names of fake students to make it look like the person was attending Rio Salado classes.

Rio Salado caters to nontraditional students, often working adults with career and family obligations that prevent them from attending most schools, president Linda Thor said. The school teaches about 60,000 students per year, more than half of them online.

"Federal financial aid is a benefit for serious students wishing to better their lives," Thor said. "We will not tolerate abuse of the system."

Rio Salado occasionally found isolated fraud cases in the past, she said, but had never come across a scheme as large as this one.

The alleged fake students range in age from 22 to 67. Almost all live in Arizona, but two are from Lander, Wyo., and one is from Stockton, Calif., according to documents released by prosecutors.

Most are charged with financial aid fraud, a felony, and false statements in connection with financial aid, a misdemeanor, according to the indictment.

Mark Kantrowitz, publisher of FinAid.org, which tracks the college financial aid industry, said scammers usually target cheap schools because their low tuition means more cash is left over after the school is paid, Kantrowitz said.

"The idea behind these scams is to cash out as much as possible," he said.